Bitcoin surges on Asian investor frenzy

Enthusiastic Asian investors have predominantly fueled Bitcoin’s recent surge to dizzying heights above $69,200. According to data from The Block, traders in South Korea, China, and other Asian nations accounted for a substantial 70% of bitcoin trading volumes in February. This echoes a scenario in 2021, underscoring the region’s significant influence on the cryptocurrency market.

Asian investors drive trading volumes

In February alone, Asia contributed $791 billion to the $1.17 trillion of bitcoin traded globally. In contrast, North American investors trailed behind with only $113 billion. The surge in interest from Asia can be attributed to various factors, including a lackluster performance in traditional markets, such as China’s stock market, prompting investors to seek alternative avenues like Bitcoin.

In China, Fear of Missing Out (FOMO) has gripped many small investors who are dissatisfied with the sluggish performance of the domestic stock market. This sentiment is reflected in the surge of searches for “bitcoin” on the popular messaging app WeChat, which skyrocketed by 12-fold in February. 

Despite concerns about the high price of bitcoin, investors like Mia Wang express apprehension about missing out on potential gains, driving further adoption of the cryptocurrency.

Regulatory landscape

The regulatory landscape for bitcoin trading varies across Asian jurisdictions, with countries like Japan adopting relatively liberal regulations compared to China, where trading and ownership of bitcoin are banned. 

Despite restrictions on spot bitcoin exchange-traded funds (ETFs) in some countries, such as South Korea, local investors find alternative avenues through bitcoin futures ETFs offered by local brokers.

Growing interest in South Korea

South Korea has emerged as a significant player in the bitcoin market, commanding a notable 10% share of bitcoin cash tokens and listed futures markets. Despite the ban on trading bitcoin ETFs, South Korean investors have shown increasing interest in bitcoin ETF futures, contributing to the cryptocurrency’s surge. Notably, trading volumes on South Korean exchange Upbit have tripled in recent weeks, reflecting local investors’ growing appetite for bitcoin.

While Asian markets are experiencing a surge in bitcoin trading, U.S.-based exchanges such as Coinbase, Bitstamp, and Binance continue to dominate global volumes, commanding a 50% share. Despite the proliferation of regional exchanges, these platforms remain preferred by traders worldwide, underscoring their continued influence in the cryptocurrency market.

Hong Kong’s crypto landscape

In Hong Kong, the decriminalization of crypto trading and the proliferation of Bitcoin ATMs and shops has facilitated increased participation from small investors and offshore Chinese financial institutions. 

The city’s largest bitcoin futures ETF, managed by CSOP Asset Management, has witnessed a five-fold increase in assets under management over the past five months, exceeding $100 million.

India’s crypto market

In India, where several local crypto exchanges operate legally, offshore exchanges like Binance and KuCoin attract significant trading volumes due to the absence of a 1% transaction monitoring tax imposed by local operators. 

Despite regulatory uncertainties, Indians have traded crypto worth 350,000 crore rupees via offshore platforms, accounting for over 90% of the total crypto trading volume in the country, according to estimates from the Esya Centre.